(CNN) -- Iceland is nearing a deal to borrow up to $2.1 billion from the International Monetary Fund to prop up its economy, the IMF and Icelandic Prime Minister Geir Haarde's office announced Friday.

The loan is "equivalent to 1,190 percent of Iceland's quota in the IMF," IMF Managing Director Dominique Strauss-Kahn said, but he said Reykjavik deserved it because of the "ambitious economic program" it has put together.

The tiny island nation "aims to restore confidence to the banking system, to stabilize the krona through strong macroeconomic policies, and to help the country achieve medium-term fiscal consolidation following the collapse of its banking system."

Iceland's stock market crashed earlier this month and the government nationalized of three of the country's biggest banks. Trading on the country's stock market was suspended for nearly a week.

The IMF deal must be approved by the organization's executive board in Washington. Strauss-Kahn said that could happen as soon as early November.

The deal would include an economic stabilization program and access to up to $2.1 billion under a two-year loan. Iceland would have access to $833 million of that money immediately, the IMF said.

"Iceland is now in a much better position to establish a sound economic and financial base for the country," Haarde said in a written statement.